TLDR:
- Venture capital is a multi-billion dollar industry but not well understood by the public.
- The Newton Venture Program aims to educate people about venture capital.
The world of Venture Capital (VC) can be confusing, with many terms causing confusion for those not familiar with the industry. In a recent article by Eleanor Kaye, she highlights five confusing VC terms and what they mean:
Cap Table: Refers to the list of investors in a startup and how much of the business they own, which changes with each round of investment.
Dilution: Founders give away ownership of their company with each new investor, but as the company grows, the value of their shares increases.
Secondaries / Secondary Sale: Existing shareholders can sell their stake to new investors without waiting for the startup to exit.
Convertible Notes: A flexible form of funding where a loan from an investor can be converted into shares at a later date.
Carry: A performance-based bonus for VC fund members, earned if the fund generates good returns through investments.
Education about venture capital is key to attracting a more diverse group of investors and founders, ultimately boosting innovation and economic growth.
